Considering a Lifetime ISA: cash or stocks and shares?

ronjefferson

Hi,

I am pretty set on getting a lifetime ISA. A 25% top-up seems like by far the best risk-free return you will get from investing money today. I would like to open it as soon as possible however I'm stuck on whether I should open the cash LISA with Skipton or if I should go for a stocks and shares one. I'm keen to go for a stocks and shares one because, despite the inherent risk, the interest rate being offered by Skipton - the only cash LISA provider currently - is terrible. However I'm only planning to put a max of £4000/year into it and so I wonder if the fees of a stocks and shares LISA would end up being so much as to make it pointless investing such small sums in it.

The main question I would like answered is a technical one. The government will top-up every £4000 invested every year with an additional £1000. If I open a stocks and shares LISA and invest £4000 in one year, but then the value of that £4000 stocks and shares investment goes down to say £3800, when I come to putting down my deposit years later will the government top-up the money I invested that year according to the money I initially invested (25% of £4000 i.e. £1000) or according to the value that the investment later came to be (e.g. 25% of £3800 i.e. £950)?

If you know the answer or have any thoughts yourself on the LISA I'm keen to hear them.

Ron

tiz

The top up is on how much you put in so it doesn't matter if it goes up or down in the meantime.

What are you planning to use it for and when? If it's buying a house in 18 months time you probably want cash if it's retirement in a few decades then S&S.

donny_jim

Hi
if it's to buy a house, then the q is how long down the line, if only a couple of years then probably cash, if 5 or more then definitely s&s, I don't like these for retirement savings. I think a SIP would be better.